Now more than ever pensions have become a major issue for our society. This crisis has been building for several years.
This blog is an attempt to stay on top of the current issues surrounding pensions. Our main feature is a regular update of the news headlines about pensions.
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Wednesday, September 9, 2009

The Socialism of Pension Funds

Some of my earliest research into pension funds led me to the writings of Peter Drucker. He envisioned in the 1970's that a move towards power in the hands of the worker through their ownership of the means of production. This ownership would be controlled by worker's pensions.

The 1970's were the beginning of large scale funding into pension plans. For example, most of the $100Billion accumulated into Ontario's Teachers Pension was saved over the past 30 years. The CPP Canada Pension Fund has accumulated over $100 Billion in a very short time.

Socialism is occurring in most developed economies around the world. It is occurring through pension funds.

Socialism refers to various theories of economic organization advocating state, worker or public ownership and administration of the means of production and allocation of resources... Contrary to popular belief, socialism is not a political system; it is an economic system distinct from capitalism

Wikipedia

Long Term Implications What will be the long term implications for capital markets and hence the means of production of the world being controlled by pension funds?

Some estimates place the total market value of the TSX at around $1.2 trillion. In Canada pension plans own a very substantial portion of those assets. The Economist

The major Canadian pension plans are owned and controlled by public sector unions. The Ontario Teachers for example, owns the a major portion of commercial property in Canada. As well they love monopoly and infrastructure industries where profits are in the range of 20% to 25% every year. Political Implications What will be the long term political implications?

The influence of pension funds around the world is going to have major implications on political policies. What is the impact of public sector unions controlling through pension funds most of a country's wealth?

Public sector unions are have very strong political views and the investments that they control will have major political influence. The public sector unions(CUPE) has very strong vies and opinions on several major social and political issues.For exampe the web site of CUPE speaks out on many issues:

These are all important issues. However, I am not sure that the public sector union view is always the best solutions for many of the problems facing our country. Political ImpotenceFor some time I have had the view that the politicians in this country have less impact on government workings and policies than the union bureaucracy. Now the bureaucracy now has the economic levers as well.

Despite the rhetoric the public sector unions do not always represent the best interest of the Canadian public. In a fight over what is best for society and what is best for the unions, the unions always side with members.

We have the situation that the long term government policies are set and impacted by government union members.

When it comes to making decisions will the unions do what is best for Canada or what is best for their pension funds? One example of this is the 407 Highway in Toronto. It is one of the most expensive highways in the world.

Is the pricing on this road based on what is best for the economic movement of goods around the metro area or what is in the profit interests of the pension plans that own the 407?

Beaten at Our Own GameAs we see the rise in Pension Socialism in the western world we are at risk of being overtaken by the BRIC (Brazil, Russia, India, China) countries. With the rise of the middle class in these countries the rise of capital will be staggering.

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Pension Crusader

Quote: Jack Dean, Pension Tsunami

The whole idea of the pension was to provide public servants with a decent retirement when they left public service. It was not to enrich them or to make them wealthy, to allow them to retire younger, with more money, to go off and play golf while the rest of us supported them. This attitude is growing out there in the public. People are beginning to realize what has been done and they are not happy about it.Pension Tsunami - http://www.pensiontsunami.com/

Canadian Taxpayers Federation

William Tufts is doing Canadians a huge favour. The employee benefits specialist recently created a new blog, Fair Pensions For All. Barely out of the gate, Tufts already has an informative blog on the problem of public pension liabilities in Canada.

Regina public pensions in deep doo-dooBill Tufts has the numbers and explains in this excellent post. He estimates the pension liabilities to be $141 million. Look out taxpayers! Contribution levels are going to skyrocket and you will be paying through the nose to give city bureaucrats pensions when their salary is already higher than yours.

Canadian Federation fo Independent Business states .... The unfairness has gone on long enough

Many Canadians will never be able to save enough to afford a comfortable retirement yet are forced to contribute into the pensions of the public sector. Most public sector employees will retire at a young age with gold-plated pensions far in excess of most Canadians' retirement savings. We cannot let this pension apartheid continue. CFIB states ....